How Should Investors Feel About IQE plc's (LON:IQE) CEO Pay?

Simply Wall St
September 17, 2019

Drew Nelson became the CEO of IQE plc (LON:IQE) in 1999. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for IQE

How Does Drew Nelson's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that IQE plc has a market cap of UK£457m, and reported total annual CEO compensation of UK£3.7m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at UK£525k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from UK£161m to UK£644m, we found the median CEO total compensation was UK£702k.

It would therefore appear that IQE plc pays Drew Nelson more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. Shareholders might be interested in this free visualization of analyst forecasts.

The graphic below shows how CEO compensation at IQE has changed from year to year.

AIM:IQE CEO Compensation, September 17th 2019
AIM:IQE CEO Compensation, September 17th 2019

Is IQE plc Growing?

On average over the last three years, IQE plc has shrunk earnings per share by 80% each year (measured with a line of best fit). In the last year, its revenue is down 4.9%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO.

Has IQE plc Been A Good Investment?

I think that the total shareholder return of 92%, over three years, would leave most IQE plc shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We examined the amount IQE plc pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

We think many shareholders would be underwhelmed with the business growth over the last three years. On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling IQE shares (free trial).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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